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Weaknesses in the structure of the West Midlands economy mean that it was hit particularly hard by the recent recession and is likely to see further job losses over the next five years.

Our latest briefing paper (pdf, 408kb), produced as part of our West Midlands Skills Assessment 2010, reveals that the West Midlands has a weaker private sector than other parts of the country. The West Midlands has poorer representation of higher value added activities and high growth firms with the potential to create new, skilled jobs.

As a result the West Midlands has seen its share of jobs in the public sector rise more rapidly than anywhere else in the country. It is particularly vulnerable to job losses from the spending cuts announced by the government.

We forecast that West Midlands Gross Value Added (GVA) will grow by only 8% (£8.8 billion) between 2010 and 2015 and there will be a net fall in employment of more than 38,000 people.

The Local Enterprise Partnerships being established to succeed Advantage West Midlands, the Regional Development Agency, will need to put strategies in place to drive up investment by the private sector in innovation, enterprise, inward investment, transport, sites and premises and in the demand, supply and effective use of skills.

This would attract and support ongoing development of more high growth businesses and firms in high value sectors such as digital media, low carbon and advanced manufacturing. In turn, this will create more and better jobs to provide work for the unemployed, help maintain social cohesion and provide prosperity for all in the West Midlands.

We estimate that if workforce skill levels across the West Midlands and the share of jobs accounted for by fast growing, higher value added private sector industries increased to match the national average by 2015, GVA would grow by some 23% across the West Midlands.

Even factoring in the impact of the public sector cuts, more than 160,000 net new jobs would be created across the West Midlands and the economies of many areas would be revitalised.